Abstract
Upon divorce, marital assets in most U.S. states are divided equitably, often with the underlying legal purpose of equalizing outcomes. To examine whether decisionmakers value economic considerations, such as opportunity cost, specialization, and bargaining power, we conducted a vignette study in which we asked subjects to divide marital assets equitably between an employed husband and a wife without labor market income in a wealthy household. Subjects award less than 50 percent of assets to the wife, regardless of her education or the level of marital assets. Men award lower shares but, unlike women, award a larger share to a more educated wife. Equitable division can lead to unequal outcomes for wives who opt out of the labor force. These findings imply that the objective of equalizing post-divorce outcomes would be better accomplished through legal directives that nudge towards equal asset division and assign greater weight to nonmonetary contributions.
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An extensive literature has examined the consequences of changes in divorce law and property division regimes on matters such as marriage and divorce rates, female labor supply, investment in human capital and marriage-specific capital, household savings, nonmarital childbearing, and consequences for children, by utilizing variation by state in the time of enactment of divorce law changes. Examples from this vast literature include Peters (1986), Gray (1998), Stevenson and Wolfers (2006), Wolfers (2006), Stevenson (2007), Voena (2015), and Alshaikhmubarak et al. (2019). Mechoulan (2005) provides an excellent review of the theoretical literature.
See Appendix Table 6. Contrary to popular belief, not all community property states require equal division of assets. Instead, only three of the nine community property states mandate equal division at the time of divorce: California, Louisiana, and New Mexico.
Information on asset division may be partially available due to the ownership interests of the divorcing couple in publicly traded firms. For example, Jeff Bezos kept 75 percent of the couple’s Amazon stock (Weiss 2019). Typically, however, no reliable, aggregate data exist concerning divorces in the United States. Part of the difficulty in compiling observational data on divorces arises from the fact that divorce procedures and filing requirements vary by state. The principal difficulty, however, is that divorce filings are generally sparse in all but the most contentious divorces, containing very few details beyond each spouse’s name. Nonetheless, since the 1990s, legal scholars have hand-collected a few, admittedly unrepresentative, data sets on all divorces filed within a short period of time within a single jurisdiction. Brinig (2005) and Garrison (1991, 1996) provide three examples of such scholarship, examining a broad range of outcomes for divorcing spouses in Iowa, New York, and North Carolina.
In actual jury trials, lawyers have the option to dismiss some of the possible jurors, in contrast to our volunteer survey respondents, who do not face any such participation screens.
Although there is wide agreement that prenuptial agreements are rare, because they are private contracts that are not recorded by courts, little is known about the specific terms of these agreements or about their prevalence. Leeson and Pierson (2016) provide an analysis of 2171 prenuptial agreements that entered the public court record through a legal dispute. Three-quarters of these agreements entered courts because of divorce litigation.
For a rich discussion of spousal bargaining dynamics at the time of divorce as an argument in favor of allowing postnuptial agreements, see Williams (2007).
A substantial literature documents a male marital wage premium of 10 to 20 percent, which economic theory attributes to the ability of the male partner to specialize in market work and the female partner to specialize in home production. For a discussion of the male marital wage premium literature, see Becker (1991) and Hersch (2003).
Further expanding on Grossbard-Shechtman’s work that rigorously models the parallel between work at home and work in the market, Grossbard-Shechtman (1994) proposes that divorce settlements be understood as a worker benefit—specifically as a form of severance pay. More highly skilled workers can expect higher wages while in the labor force and, thereby, a higher settlement in the case of either work termination or divorce. A key difference between Grossbard-Shechtman’s proposal and our study, however, is that we focus on allocation of marital assets at dissolution, not ex-post compensation for the earnings consequences of housework performed during marriage.
For example, many equitable division states have codified the property disposition language contained with the 1973 Uniform Marriage and Divorce Act (UMDA) into law. (Some have codified the exact language; others have codified similar language.) The UMDA requires decisionmakers to consider, among other things, the “health, vocational skills and employability of the respective spouses and these contributions to the acquisition of the assets, including allowance for the contribution thereto of the ‘homemaker’s services to the family unit.’” See National Conference of Commissioners on Uniform State Laws (1973).
In fact, the UMDA suggests two alternative sets of statutory language for marital property division regimes, depending upon whether the state recognizes community property. Recognizing that most states are not community property regimes, the drafters of the UMDA indicated that the non-community property alternative, quoted above, is the “alternative recommended generally for adoption.” Nonetheless, the subjective factors listed in both alternatives are substantially similar.
Both of the UMDA’s suggested alternatives of the property disposition alternatives ask decisionmakers to consider the noneconomic contributions of a homemaker. Alternative A (for non-community property regimes) lists the “contribution of a spouse as a homemaker or to the family unit” as a relevant factor. Alternative B (for community property regimes) lists “contribution of each spouse to acquisition of the marital property, including contribution of a spouse as homemaker” as a relevant factor.
Wendt v. Wendt (1998) received extensive media coverage, including a cover story in Fortune magazine. Myra Strober served as the economic expert for Lorna Wendt. See Strober (2002) for a description of her legal argument for an equal split of assets, based on the understanding that the Wendt marriage constituted a two-person career with equal contributions. This argument was not persuasive to the Wendt judge (who only awarded Lorna Wendt about 20 percent of the marital assets), nor do we expect this argument to be persuasive to our experimental subjects. There are no data regarding whether other courts have ever assigned value to the nonmonetary contributions of homemakers to household assets. It is worth noting, however, that in lawsuits over wrongful death of a homemaker, the nonmonetary contributions to household assets are not specifically valued. Instead, her contributions to the household are valued at either replacement cost (what it would take to hire outside services to perform her functions) or opportunity cost (what she would have earned in the formal labor market with the amount of time she devoted to home production). See Hersch (2003) for a discussion.
Subjects were directed from mTurk to the survey instrument, which was programmed using the survey software Qualtrics. Our fifteen-minute survey provided four scenarios; we limit discussion to the one scenario of relevance to this paper. Some immediate concerns that may arise with respect to our subjects relate to both who mTurk workers are and how seriously these workers take experiments (since they earn approximately $6 per hour for taking surveys like ours). Our subjects, whose demographic information is presented in Appendix Table 7, average high levels of education and are very likely to be employed, which is typical for an mTurk subject pool (Shinall 2019). In addition, prior evidence suggests that mTurk subject pools may take surveys like ours even more seriously than other experimental subject pools. Berinsky et al. (2014), for instance, found that mTurk workers, who were compensated in a similar fashion to our experiment, paid more attention to screening questions than subjects recruited from other online sources.
Our scenarios, which involve a married mother not in the labor force, reflect a fairly common household situation. In 2012, 29 percent of all married mothers with children under age 18 were not in the labor force (Cohn et al. 2014). The share of mothers not in the labor force is highest for households with high-earning husbands; in households with husbands who earn over $250,000, 46 percent of mothers are out of the labor force (VerBruggen and Wang 2019). There are no available data on the wealth distribution of couples filing for divorce.
The American Bar Association Standards and Rules of Procedure for Approval of Law Schools have a professional responsibility requirement, a writing requirement, and an experiential requirement. Family law is not a typical first-year core requirement in law school, nor is it tested on the Multistate Bar Examination.
According to 56 A.L.R.4th 955 II(§3) (Ghent 2011), eleven states have at least one positive judicial decision in favor of allowing jury trials for divorce proceedings.
Per referee request, we emphasize that each subject saw only one of the six scenario versions.
Net marital assets are influenced not only by assets accumulated during marriage, but also current and prior educational debt. Total educational debt will be far higher in the A/B scenarios, in which both John and Susan have M.D. degrees, than in the C/D scenarios, in which John has an M.D. degree and Susan has a bachelor’s degree in nursing. For this reason, even if Susan is better equipped to discuss work as an M.D. (which is not certain), it is not obvious that the net marital assets will be greatest in the dual-M.D. scenarios (A/B).
After seeing the dollar value of their distributions, subjects had an opportunity to correct their percentage distribution, if desired.
In Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 133 (1995), Justice Ruth Bader Ginsburg noted, “In legal systems… ‘equitable’ signals that which is reasonable, fair, or appropriate.” Family law scholars similarly endorse the legal equivocation of equity and fairness. See, for example, Ratner (2011, p. 23) (“[J]udges feel compelled to assign to the term equitable its well-known general meaning in law: do the fairest thing given the circumstances.”), and Ellman et al. (2010, p. 386) (“‘Equitable’ is merely a four-syllable word for ‘fair.’”)
The demographics of our subjects are presented in Appendix Table 7.
Work-in-household is also referred to as work-in-marriage. See Grossbard-Shechtman (2003) for an overview of her model, which develops work in the household in a manner analogous to work in the labor market.
The fact that highly educated individuals award more to Susan (albeit still less than 50 percent of the assets, on average) is notable since judges and mediators charged with dividing marital assets are likely to be highly educated.
Shinall (2019) presents evidence that decisionmakers award male breadwinners a greater share of assets than similarly situated female breadwinners, indicating that the disadvantage faced by women in equitable division proceedings may be particularly insurmountable.
The full Oaxaca-Blinder decomposition results are presented in Appendix Table 8.
After noticing that female subjects who rated Susan’s education as an important motivation also awarded more to Susan, an anonymous referee suggested that we add interaction terms between subjects’ educational levels and subjects’ education-related motivations to our regressions in Table 3. The hypothesis was that actual educational levels may be different among subjects for whom John’s and Susan’s education served as important motivations. Although quite plausible, this hypothesis did not find any support in our data; the coefficients on the interaction terms between subjects’ educational levels and their education-related motivations were individually and jointly insignificant.
See, for example, Glendon (1984) at 1556 (discussing the “defects in discretionary distribution,” including being “widely perceived as unfair by litigants”).
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Acknowledgements
We thank students in the Ph.D. program in law and economics at Vanderbilt University, Sarah Dalton, Laurel Donahue, Shoshana Grossbard, and participants at the American Economic Association 2017 meeting and Society of Economics of the Household 2017 meeting for helpful comments.
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Hersch, J., Shinall, J.B. When equitable is not equal: experimental evidence on the division of marital assets in divorce. Rev Econ Household 18, 655–682 (2020). https://doi.org/10.1007/s11150-019-09475-w
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DOI: https://doi.org/10.1007/s11150-019-09475-w